James River beats Q3 Wall Street estimates after “very strong quarter”

James River Group’s outgoing CEO has called the company’s results for 2020’s third quarter “very strong” after the business’ operating profit per share comfortably beat the average of analysts’ estimates.

Bermuda-headquartered James River posted operating profit of $17.4mn for 2020’s third quarter, a marked improvement on the net operating loss of $22.2mn it reported in Q3 2019.

Operating income per share of $0.56 for 2020’s third quarter was ahead of the $0.50 that was the average of Wall Street analysts as compiled by S&P Global Market Intelligence.

The company saw its net written premium for the third quarter of 2020 drop by 35 percent year on year to $145.2mn.

The insurer’s gross written premium (GWP) fell by 20 percent year on year to $311.9mn. Its Q3 2020 excess and surplus (E&S) lines business saw GWP fall by 26 percent compared with the prior year period to $179.5mn.

Core E&S GWP increased 28 percent year on year, however, with eight of James River’s 12 core underwriting divisions experiencing growth.

Much of the decline in GWP across the business can be attributed to a significant decrease in the insurer’s commercial auto GWP, which fell from $108.4mn in 2019’s third quarter to $9.7mn for Q3 2020 due to the cancellation of James River’s contract with Uber.

Specialty admitted insurance GWP increased by 12 percent year on year in the third quarter, to $112.6mn.

This increase, James River explained, was due to a 14 percent increase in premiums written by its fronting business.

Net investment income across the business amounted to $15mn in Q3 2020, down from $17.9mn in the prior year period.

In a statement, James River’s soon-to-be-replaced CEO J Adam Abram said the company “delivered another very strong quarter”.

“Market conditions are extremely attractive across our businesses. Core E&S gross written premiums increased 28 percent this quarter compared to the same period a year ago. New business submissions in our E&S segment increased by 9 percent and renewal applications increased by 27 percent,” he said.

Abram said those figures are an indication that risks are remaining in the non-admitted market longer than in prior years.

“We benefited from a 12.8 percent increase in rate in E&S. This was the 15th sequential quarter in which E&S rates have increased. E&S policies in force have grown by 26 percent since the third quarter of 2019,” Abram added.

“Our efforts to grow our fronting business continue to bear fruit, as evidenced by our 14 percent increase in fronted premium and 17 percent increase in fee income in our specialty admitted Insurance segment as compared to the third quarter of last year,” the executive stated.

Abram’s comments come shortly after it was announced that he is retiring as CEO of the company as of 2 November with former Allied World executive Frank D’Orazio taking over the position. Abram will stay at the company as non-executive chairman.